Price-Gouging May Sound Great in the Short Term But Hurts in the Long Term

Demand for travel is surging but that’s not an excuse to surge prices. Last March, McKinsey released a report showing that 44 percent of Americans want to get out and travel. As the noise of the global pandemic finally winds down, more people want to splurge on vacation and globetrotting in a phenomenon referred to as “revenge travel.” It’s just basic psychology to want to flee after being cooped up for so long. Another basic psychological instinct is when there’s a demand, the value of supply goes up. The sad fact is that inflation has hit record-high rates. Prices of goods and services are climbing at the fastest rate in 40 years. It’s understandable that hotels and restaurants may want to recover their losses while trying to combat the rising costs of living. As early as last year, there have been reports of luxury resorts jacking up room rates. But here’s a major problem with that strategy: Many hospitality industry jobs are still vacant. Overcharging for luxury and not delivering on the promised white-glove service will only catch up as a major problem later. Depending on the state, there are price gouging laws in place. And there are law firms waiting for the opportunity to pounce the perceived deep pockets of a luxury hotel. This could be a better time to refocus on connecting the relationships lost with guests. "Smarter and more profitable" Since the pandemic, more research has shown guests have social distancing and safety at top of mind. Oneof the latest reports from Oracle Hospitality is titled "Getting Smarter and More Profitable." Implementing touchless check-in and payment technology. The investment in technologies can lead to better customer satisfaction and alleviate staffing issues. It's still unclear if staffing shortages will eventually bounce back. This is the time to pivot and remove that payroll budget and invest. Some hotels have adapted to renting out kitchen space to a third-party food business called a "ghost kitchen." There are other revenue opportunities to adapt business rather than simply charge more for what you currently have. The report refers to these other income sources as "non-room revenue." Basically how you can make up costs on property without focusing all energy to maxing out room stay. Here are some of the non-room revenue offering consumers are most interested in when polled... Food from the restaurant: 91 percent Drinks at the bar: 86 percent Package deals: 83 percent Touts and activities: 81 percent "You think about things like our world-class spas and our fitness facilities, our restaurants, bars, these were already very much oriented towards local guests and the local environment," said Ben Trodd, senior vice president, sales and hotel marketing at Four Seasons Hotels and Resorts in the report. “So we continue to focus on communicating those offerings very, very carefully.” Long-term, guests don't want to pay more for what you already offer. They will pay for a different experience.

Price-Gouging May Sound Great in the Short Term But Hurts in the Long Term

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